On Track Innovations Ltd. (oti) (OTIV ), a global provider of
near field communication (NFC) and cashless payment solutions,
reported financial results for the fourth quarter and fiscal year
ended December 31, 2014.

Q4 2014 Financial Details
Revenues increased 4% to $5.5 million from
the prior quarter, and decreased 12% from $6.2 million in the same
year-ago period. The decrease from the year-ago period was primarily
due to a decrease in sales in the U.S. market.

Gross profit was $2.5 million (46% of revenue) compared to $3.1
million (49% of revenue) in the same year-ago period. The decrease
was primarily due to lower revenues and a greater mix of lower margin
product sales.

Operating expenses totaled $5.0 million compared to $7.1 million in
the same year-ago period. The decrease was primarily attributable to
a decrease in general and administrative expenses and patent-related
expenses. Q4 2013 operating expenses included an impairment and
amortization of intangible assets and goodwill expenses of $826,000.

Net loss from continuing operations totaled $2.6 million or $(0.08)
per share. This compares to net loss from continuing operations of
$4.1 million or $(0.12) per share in the same year-ago period.

Adjusted EBITDA loss from continuing operations totaled $1.6 million
compared to an adjusted EBITDA loss from continuing operations of
$2.1 million in the same year-ago period (see discussion about the
presentation of adjusted EBITDA from continuing operations, a
non-GAAP financial measure, below).

2014 Financial Details
Revenues increased 16% to $23.1 million from
$19.9 million in 2013. The improvement was driven by an increase in
NFC reader sales in the U.S. market and WAVE NFC device sales.

Gross profit increased 3% to $11.1 million (48% of revenue) from
$10.7 million (54% of revenue) in the same year-ago period. The
increase was primarily due to the higher revenues, offset by greater
mix of lower margin product sales.

Operating expenses totaled $20.6 million compared to $16.5 million in
the same year-ago period. 2013 operating expenses were offset by $4.2
million in "other operating income, net" due to a write-off of
provisions for former executives termination following a settlement.
Excluding the "other operating income, net" in the year-ago period,
2014 operating expenses were flat despite the increase in non-cash
stock-based compensation, as well as continued investment in sales
and marketing resources related to the companys sales growth
initiatives in new and existing markets.

Net loss from continuing operations totaled $10.2 million or $(0.30)
per share compared to a net loss from continuing operations of $6.9
million or $(0.21) per share in 2013.

Adjusted EBITDA loss from continuing operations totaled $5.8 million
compared to an adjusted EBITDA loss from continuing operations of
$2.1 million in 2013.

Management Commentary
"The fourth quarter was consistent with our
expectations as well as the outlook we provided in November," said
oti CEO Ofer Tziperman. "While at the beginning of 2014 we expected
to achieve a higher growth rate than 16%, we were not in a position
to anticipate the slowdown of market participation leading up to the
launch of Apple Pay and industry rumors around its underlying
technology possibly not being NFC-based. While we believe the future
of NFC was never reliant on Apples decision, their adoption of NFC
reaffirms the tremendous value of otis 20-year investment in NFC
technology and supports the long-term vision shared by our partners
and customers.

"Despite the delay of some related orders in the second half of 2014,
interest in our industry-leading NFC readers and WAVE devices is
growing globally. In fact, we have and continue to be approached by
leading players in the industry, including major vending machine
manufacturers and operators, as well as global channel partners.

"These major players are interested in deploying otis line of
cashless payment readers, and are currently in various stages of
testing and integration. In terms of revenue expectations, is
important to note that the typical sales cycle and implementation
process for a major new customer can take 12 months or longer.
However, we are working diligently to convert these engagements into
meaningful sales in 2015 and beyond, and this increased activity
strengthens our confidence that oti will be a major player in the
fast growing market for cashless payment readers."

Conference Call
oti management will hold a conference call on
Monday, March 30, 2015 at 10:00 a.m. Eastern time to discuss these
results.

Investors and analysts are requested to submit questions they would
like the company to address on the call. Please submit your questions
to ir@otiglobal.com by tomorrow, March 26 at 4:00 p.m. Eastern time.

To listen to the call, dial the conference telephone number 10
minutes prior to start time. An operator will register your name and
organization. If you have any difficulty connecting, please contact
Liolios Group at 1-949-574-3860.

A replay of the call will be available after 1:00 p.m. Eastern time
on the same day through April 30, 2015.

Use of Non-GAAP Financial Information
This press release contains
certain non-GAAP measures, namely, adjusted EBITDA from continuing
operation, or adjusted earnings from continuing operation before
interest, income tax, depreciation and amortization. Adjusted EBITDA
from continuing operations represents earnings before interest or
financing expenses, income tax, depreciation and amortization, and
further eliminates the effect of share-based compensation expense and
patent litigation and maintenance expenses. OTI believes that
adjusted EBITDA from continuing operations should be considered in
evaluating the companys operations since it provides a clearer
indication of OTIs operating results. This measure should be
considered in addition to results prepared in accordance with US
GAAP, but should not be considered a substitute for the US GAAP
results. The non-GAAP measures included in this press release have
been reconciled to the US GAAP results in the tables below.

About OTI
On Track Innovations Ltd. (oti) is a leader in contactless
and NFC applications based on its extensive patent and IP portfolio.
otis field-proven innovations have been deployed around the world to
address NFC and other cashless payment solutions, petroleum payment
and management, cashless parking fee collection systems and mass
transit ticketing. oti markets and supports its solutions through a
global network of regional offices and alliances. For more
information, visit www.otiglobal.com.

Safe Harbor for Forward-Looking Statements
This press release
contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and other Federal securities
laws. Whenever words such as "believe," "expect," "anticipate,"
"intend," "plan," "estimate" or similar expressions are used, the
company is making forward-looking statements. Because such statements
deal with future events and are based on otis current expectations,
they are subject to various risks and uncertainties and actual
results, performance or achievements of oti could differ materially
from those described in or implied by the statements in this press
release. Such forward-looking statements used in this press release
include, but are not necessarily limited to certain expectations that
the company will be able to convert its customer engagements into
meaningful sales in 2015 and beyond; succeed in becoming a major
player in the fast growing market for cashless payment readers.
Forward-looking statements could be impacted by the effects of the
protracted evaluation and validation periods in the U.S. and other
markets for contactless payment cards, as well as otis new and
existing products and our ability to execute production on orders, as
well as other risks and uncertainties, including those discussed in
the "Risk Factors" section and elsewhere in our Annual Report on Form
10-K for the year ended December 31, 2013, and in subsequent filings
with the Securities and Exchange Commission. Although the company
believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, it can provide no
assurance that expectations will be achieved. Except as otherwise
required by law, oti disclaims any intention or obligation to update
or revise any forward-looking statements, which speak only as of the
date hereof, whether as a result of new information, future events or
circumstances or otherwise.